Credit Union Net Income Rises Sharply in Q3

Losses were fewer than either the second quarter or the third quarter of 2024. However, among those losing money, the weighted losses were greater: -0.81% in the third quarter, compared with -0.64% a year earlier and -0.53% in the second quarter.

That difference with ROA was obviously a function of smaller credit unions reporting bigger losses in the third quarter. Among those with gains, ROA in the third quarter was 0.97%, compared with 0.81% a year earlier and 0.89% in the second quarter.

The third-quarter results were adjusted upward by $7 million after CU Times found an unbelievable $7 million loss from a credit union with less than $30 million in assets. CU Times checked and the credit union had quickly filed a revised Call Report which showed its loss was more like $20,000.

Although the error was less than two-tenths of a basis point in ROA for all credit unions, it happened through the magic of rounding to be just enough to drop ROA by 1 basis point.

Callahan said the 4,392 credit unions in its database as of Nov. 11 accounted for 99.6% of movement assets.

The 529 credit unions losing money was led by Civic Federal Credit Union of Raleigh, N.C. ($3.5 billion in assets, 366,134 members), which lost $50.5 million (ROA -5.63%) in the third quarter after losing $24.8 million (ROA -2.58%) in the previous quarter.

Civic has been losing money since 2024 as it was completing its massive project of separating from State Employees’ Credit Union of Raleigh, N.C. ($56.8 billion in assets, 3 million members).

It’s a long story involving unhappy bankers and creative credit union leaders.

SECU had been serving local government employees as well as those drawing a paycheck from the state, but bankers cried foul and SECU spun off Local Government Federal Credit Union in 1983 to serve those members. However, the new credit union was allowed to use SECU branches and systems for a fee.

SECU decided in recent years to end that arrangement. As a first step Civic Federal Credit Union was launched in 2018, and last September it acquired Local Government FCU. It has set up its own systems and established two corporate offices and eight branches across the state.

These things cost money, and the short of it is that Civic President/CEO Dwayne Naylor expects the credit union to be back in the black in two years.

Naylor said the big expenses were planned for and the credit union had the net worth to absorb them. Its net worth ratio stood at 8.05% as of Sept. 30.

“Most of these high expenses for the transition have stopped,” Naylor said. “It’s been a tough year, but our reason and vision are the next 40 years, not the last five months.”

The second-biggest loss came from Envision Credit Union of Tallahassee, Fla. ($830.6 million in assets, 63,238 members). It lost $11.8 million (ROA -5.65%) in the third quarter after earning $1.1 million (ROA 0.52%) in the previous quarter.

Envision was acquired Oct. 1 by Addition Financial Credit Union of Lake Mary, 20 miles north of Orlando, which had $3 billion in assets and 193,000 members on Sept.30, on the eve of the merger. Addition Financial declined comment on the loss.

Overall net income fell by $11.1 million from 2024’s third quarter to 2025’s third quarter, with the biggest factor being a $3.4 million increase in employee expenses. Also contributing were increased expenses of $1.8 million for professional and other outside services and $1.3 million for NCUA’s “miscellaneous non-interest expenses” line.

The sole comment posted on NCUA’s website regarding the merger was from an Envision member of over 40 years who said the credit union had been doing an excellent job, and the board’s decision to seek a merger without involving the membership in advance made the merger seem “ridiculous and puzzling.” He also asked for an explanation of “why each SVP is set to receive a $250,000 bonus if they pull this merger off?”

Contact Jim DuPlessis at JDuPlessis@cutimes.com.